Observations of the legal scene from the Cornhusker State, home of Roscoe Pound and Justice Clarence Thomas' in-laws, and beyond.
Wednesday, November 09, 2005
Struggle for control of Hitchcock Foundation goes to Supremes Associated Press The fight for control of one of Nebraska’s oldest and most prestigious charitable foundations goes on despite the death of the leader of the one of the factions. The August death of foundation trustee Denman Kountze Jr. effectively ended the three federal lawsuits he had filed in the dispute. But it appears the final say on who runs the Gilbert M. and Martha H. Hitchcock Foundation will be decided by the Nebraska Supreme Court, which has yet to schedule arguments in the case. Earlier this dispute became the subject of lurid allegations of self dealing by well connected Omaha power players in the radical publication Counter Punch
“We think that the Nebraska Supreme Court has a very important decision to make,” said Omaha attorney David Domina, who represents the Denman Kountze Jr. faction The foundation, which has some $18 million in assets, was established in 1943 by Martha Hitchcock, the wife of Gilbert Hitchcock, a U.S. senator and founder of the Omaha World-Herald newspaper.
It has given money to such entities as Columbia University, the University of Nebraska, the Nebraska Museum of Art, the Nebraska State Historical Society and American Public Television.
The fight has split members of Omaha’s Kountze family, which married into the Hitchcock family generations ago.
Last year, Douglas County District Court Judge James Gleason ruled in favor of one faction of the family — trustees Neely Kountze, his wife, Mary Kountze, and Tyler Gains — effectively giving them control of the foundation.
The other side was led by Denman Kountze Jr. — Neely Kountze’s uncle, who had served as president of the foundation since 1984. Remaining are Denman Kountze’s two sons, Charles and Edward.
The fight began in 2002 and escalated when Neely and Mary Kountze and Gaines filed a lawsuit accusing Denman, Edward and Charles Kountze of trying to take control of the foundation.
In a countersuit, Denman, Edward and Charles Kountze claimed they had rightful control of the foundation and accused Neely Kountze of using foundation money to benefit charities with which he had ties.
Gleason found no wrongdoing on the part of Neely Kountze.
Gleason also voided a foundation rule that required Denman Kountze Jr. to be present in order for a board meeting to take place.
The judge said he kept Denman Kountze Jr. on the board only because the other side requested that he remain. Gleason also said Edward Kountze must be removed from the board because, among other things, he tried to give money to Columbia University without board approval.
Edward Kountze has maintained that the last will and testament of Martha Hitchcock requires the foundation to donate money to Columbia.
The Denman Kountze faction asked for a new trial in front of another judge, which Gleason denied.
That decision is the subject of the case pending before the high court.
The federal lawsuits were filed in Nebraska and New York.
The New York case challenged the stop-payment on a $125,000 scholarship check from the foundation to Columbia’s Graduate School of Journalism in late 2002.
Another lawsuit, filed in U.S. District Court in Omaha, challenged legal fees paid by the foundation on behalf of the Neely Kountze faction.
A third lawsuit questioned foundation investments handled by First National Bank of Omaha.
As for the case before the high court, Ed Hotz, the lawyer for the Neely Kountze Jr. side, said “We’ll just have wait and see.”
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15 comments:
THIS FIGHT STARTED IN 2001,WHEN FIRST NATIONAL BANK OMAHA BOUGHT-WITHOUT BOARD APPROVAL OR PERMISSION- $200,000 WORTH OF ENRON BONDS FOR THE FOUNDATION AT A TIME WHEN THE BANK WAS RIDDING ITSELF OF ALL ENRON STOCKS AND BONDS. THE BANK PROMISED IN WRITING TO RECTIFY THIS-FNBO TRUST DEPARTMENT HEAD CRAIG MCGARRY,WHO WAS IN CHARGE OF THE BOND PURCHASE, AND NEVER HAS, BUT CONTINUES TO RAKE FEES FROM THE FOUNDATION FOR IT'S PAST LOSSES. THE BANK HELPED TO SET UP A MEETING AT IT'S OFFICES TO AMBUSH IN A FALSE ELECTION, ANYONE ON THE BOARD WHO SOUGHT TO RECOVER THE ENRON BOND LOSS, WHICH THE BANK HELD ONTO FOR THE FOUNDATION UNTIL ENRON'S FRAUD COLLAPSED IN THE FIRST WEEK OF DECEMBER,2001.
The so called 'board members'(one-John Webster,never a corporate board member, but he sued the corporation's president and board as if he was one-outrageous!) brought suit to cover over their self-dealing transactions(NY TIMES-JAN.9,2004) and have had their case reversed.No surprise there,they had no case. Their attorney should be ashamed for even bringing this case, and helping to orchestrate this fiasco, but the fees have been too rich to pass up. During the appeal the 'rump' board members, have spent over $300,000, maybe more- on their lawyers, and cronies, and have apparently sold off hundreds of thousands dollars of corporate stock shares of the corpoartion to do it, while never having been board members! Corresponingly, the foundation's value has plunged during this period, a time when the market has reached an all time high. No wonder Warren Buffet moved his money out to of the state of Nebraska to Seattle to give away, if this is how the genius of generosity is treated by a court in Nebraska. A disgrace.
The Supreme court reversed and remanded the proceedings, finding the court had no jurisdiction to proceed in the case. The Supreme Court of Nebraska did state in their published opinion of August 18,2006,that the multiple allegations of fraud, and self-dealing in a multimillion dollar philanthropic corporation mandates the Attorney general get involved as the Nebraska statute demands. The AG has made a post-appelate appearance, and recommeded a reciever be appointed to take over the foundation's financial affairs, which have been dissapated by the parties accused of self-dealing in the first case. On Jan.9,2007, a lawsuit was filed on behalf of the foundation against Neely Kountze, Tyler Gaines, and their consul, demanding a repayment of over $350,000 paid out for their personal benefit during the appelate period, and asserts that Neely Kountze sold, during the appelate period, core assets of the foundation to pay these fees, and filed false federal tax returns on behalf of the foundation, listing personal legal fees as deductible expenses.
Can you say, "libel?"
The 990-PF's for the foundation show that at the beginning of this lawsuit the foundation was worth between $17-18 million, and that it is now worth about $15.4 million. The court allowed a faction to control the assets of the corporation and they have dissapated the assets substantially(Public 990 PF's show that the last time the stock market was this high the foundation was worth more than $20 million, in 2000)it's lost 25% of it's value to legal fees of questionable legality-some of which were to threaten the New york Times and the Associated Press with "libel' lawsuits!--and bad investments directed by a board which brought a failed lawsuit against the foundation itself.
Fascinating. Sounds like you know a lot about this. Say, this wouldn't happen to be an internet smear campaign by a party who's actually involved in this dispute, would it? Have this conversation with your lawyer; don't drag all of us into it.
Maybe if you didn't post your rants at 3:27am they would be more coherent. Wait... No, reading your earlier posts, I guess not. Congratulations on learning how to turn off caps lock, though.
I really don't think that this was a smear campaign. The article really was written in favor of one of the sides of this dispute, and the 5 comments posted were merely the other side. All of the facts were presented, and I don't think that knowing about both sides of this dispute will drag you into it, it will just educate you a little. You aren't as significant as you seem to think you are.
Oh, and I thought that the comments were perfectly coherent. Maybe you're just stupid.
How could the author of these posts possibly have all these "facts" at his disposal and not have been involved in the dispute? On the one side, we have the Associated Press. On the other side, we have run-on sentence rants from someone obviously connected to this case.
You obviously feel very strongly about this and are obviously one party in a lawsuit trying to slander the other side.
Trials are open to the public as are oral arguements to the Supreme Court, all courts are supported by taxpayers and open to the public. Foundations information is also available to the public, as any foundation is a public benefit corporation, and exists for the public benefit, not for the 'insiders' on any foundation board. Who represents the party known as the general public in this dispute? These foundations simply become private fiefdoms of the country club rich without meaningful governmental enforcement, as 'self-policing' or voluntary compliance doesn't work with private foundations, or private equity, or banks, as we have all witnessed during the subprime meltdown.
I'm not buying it. The hysterical rantings above give you away. Too bad you can't delete them now that you're claiming all you know is from the public record.
I repeat: you are obviously one party in a lawsuit trying to slander the other side. Tell it to the judge.
Which hysterical rantings, the ones from "I'm not buying it"? You say you are not buying "IT". What exactly are you not buying? Hmmm,comments like those seem agressive,accusatory, like an attempt to provoke other commentators to this blog. A rant. You command:"Tell it to a judge." Well, the Hitchcock evidence WAS presented to a judge, and seven more Judges--- on the Supreme Court,and the media,which has published many articles on the Hitchcock case.
(yawn)
"QUI BONO",and "FOLLOW THE MONEY.."
Nothing like a little Dog Latin to go with your libel. "Qui Bono" means "who with good" and is nonsense.
arf.. arf...
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